Under pressure, Amish farmers begin to exit dairy business

He has invested heavily in cows and related machinery over the last 17 years. Now, with depressed milk prices seven out of the last eight years, Petersheim is in debt and wonders how much longer he can hang on.

He has seen other milk men around the county sell their cows or turn to growing produce or tobacco to pay the bills.

But he doesn’t want to give up his way of life as a dairy farmer.

His concern is shared by other local Plain Sect dairy farmers — a considerable source of milk production in the state’s number one dairy county.

Some believe a retreat from dairy farming among Plain Sects has already begun.

There is no sign that Plain Sects are pulling up stakes altogether and leaving Lancaster County, but it is not clear how many would find long-term, profitable alternatives to their livestock-intensive dairy farms, their traditional livelihood.

Has a slow exodus of Plain Sect farmers from the dairy business in Lancaster County already begun?

The farmers do not blame consumers’ declining milk consumption for their predicament.

Rather, frustrated local Plain Sect farmers here and around the state have banded together to protest — and in at least one case, sue — over the way milk is controlled, priced and sold after leaving their milking barns.

They blame what they see as lack of representation and empire-building by large, officially nonprofit milk cooperatives that now are assuming control of dairies and milk processors, and have broad powers.

Among the powers cooperatives wield are the right to deduct the costs of marketing and milk transportation from dairy farmers’ checks without having to itemize those deductions to the farmer.

The cooperatives also have voting rights on how milk pricing is set, while individual farmers don’t.

Milk cooperatives, which arose out of the Great Depression, pool funds from members and negotiate prices to help farmers assemble, haul, manufacture, process and market milk and dairy products to wholesale and retail outlets.

With few exceptions, nearly all dairy farmers in Lancaster County sell their milk through large cooperatives such as the Dairy Farmers of America, which represents nearly 14,000 dairy farms nationwide.

And the local dairymen are pushing for more transparency in the way the price of milk is uniquely controlled in Pennsylvania through the Pennsylvania Milk Marketing Board.

Questionable milk tax?

Only in Pennsylvania do consumers pay a 17-cents-a-gallon surtax on drinking milk. It has been as high as 28 cents and makes the cost of milk in Pennsylvania among the highest in the nation.

That milk tax, or premium as it’s called, raises $30 million to $50 million a year that is supposed to go back to dairy farmers and keep them in the black in tough times.

But some local farmers complain the money is eaten by large corporate-like cooperatives that do not always return the money to member farmers.

“Some do. With some it’s questionable,” says state Rep. John Lawrence, who represents parts of Lancaster and Chester counties.

Bernie Morrissey, a former agriculture insurance company owner from Ephrata who retired to become an advocate for local Plain Sect farmers, described the surtax revenue as “a slush fund for someone. We know it’s not going back to the farmer.”

Local dairy farmers also allege that cooperatives are encouraging more milk production to make more money at the expense of dairy farmers who suffer as prices drop during a glut.

Defending cooperatives

Not everyone in the milk industry agrees.

Thank goodness for cooperatives in hard times for the dairy farmer, says Justin Risser, a dairy farmer from Elizabethtown and past president of the Professional Dairy Managers of Pennsylvania.

“Cooperatives are not in it for the money,” he says. “Farmers think they are taking a lot out of their milk checks, but cooperatives have to. When they have an expense such as overproduction, they have to take that expense out and pass it around to every member of the cooperative.

“I don’t think there is anything going on with cooperatives that is unethical.”

Criticism of the Milk Marketing Board stems from the understandable frustration with ongoing tough times in the dairy industry. But the criticism is misguided, says its chairman, Luke Brubaker, patriarch of the large Brubaker Farms dairy operation in Mount Joy.

“We have a great system here in Pennsylvania which is benefiting most farms and also is benefiting the dairy industry of Pennsylvania,” he says. “I think the cooperatives are doing the best they can when there is an oversupply of milk.”

But local farmers who disagree are fighting back with legislation and calls for unsuspecting consumers to stand up for those down on the farm.

A very visible sign of their dissatisfaction occurred in August 2016 when some 800 dairy farmers, including many Plain Sect farmers from Lancaster County, descended on the 2016 Ag Progress Days in State College.

But the farmers crowded into a hearing by the state House and Senate Agriculture and Rural Affairs committees to show their support for a bill introduced by Lawrence to require more transparency from dairy cooperatives on what they are doing with the milk money collected from consumers on behalf of farmers.

The bill — Lawrence’s third attempt — passed the House but died in the Senate without coming to a vote. The bill, which was opposed by dairy cooperatives, had the backing of all Lancaster County legislators.

In 2011, then-state Sen. Michael Brubaker of Lancaster County had attempted to go even further, introducing legislation to change the structure of the Milk Marketing Board and reform how the state’s milk tax is collected and distributed to farmers.

The bill died in committee.

Trying to hang on

To local dairy farmers, these failed attempts are a sign that the power flows from the milk cooperatives and processors, not where the milk begins.

“Me, as a dairy farmer, I’m trying to pay my bills. I don’t really know what to do other than get it out to the consumer to know what’s actually happening,” says Amish dairyman Chester Fisher of Lancaster.

Fisher was one of eight Plain Sect dairy farmers who recently asked LNP to hear their concerns. More than 100 farmers wanted to attend a meeting with a reporter, but were requested to send a smaller delegation.

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“The bottom line is dairy farmers are going to go out of business if something doesn’t change. There will always be farmers in America, I believe, but it will be a corporate business.”

“The bottom line is dairy farmers are going to go out of business if something doesn’t change,” said John J. King, a fellow dairy farmer from Pequea. “There will always be farmers in America, I believe, but it will be a corporate business.”

Morrissey’s conclusions are even more pointed.

“We do know the people in this room and the people they represent are going bankrupt,” he says. “They are getting less money and it costs more to make the milk. They are operating on borrowed money. They’re being eliminated.”

Morrissey says the spiral for the milk industry is so dire that he predicts many Plain Sect dairy farmers in Lancaster County will be forced to abandon their cows within 10 years.

“Lancaster County would never be the same,” he says.

Battling back

Are those concerns overstated?

Last month, at a dairy summit of sorts called by U.S. Bob Casey in the county, Cheryl Cook, the state’s deputy agriculture secretary remarked, “A lot of our dairy farmers are building broiler houses just to stay in business.”

Asked if he shared such a dire view of the future, Lawrence said Plain Sect farmers have always been resilient, “but you can continue in a money-losing operation only for so long.”

Sherry Bunting, a Caernarvon Township resident and regular contributor to Farmshine, a weekly dairy publication based in Brownstown, said: “The money, by and large, is not getting back to the farmers.

“As the cooperatives own more and control more of the balancing assets, we’re seeing more and more pressure on these small farmers,” she said.

Also at the LNP meeting was Mike Eby, of Gordonville, who sold all his cows in 2016 and became chair of the National Dairy Producers Organization, a grassroots group with hundreds of Pennsylvania members.

The group is dedicated to reforming the largest co-ops that Eby contends no longer look out for the best interests of member dairy farmers.

“Why is there an oversupply of milk in excess of profitable demand? Follow the money. The answer is that simply everyone benefits from all the milk except the dairy farmer.”

“Why is there an oversupply of milk in excess of profitable demand?” he asks rhetorically. “Follow the money. The answer is that simply everyone benefits from all the milk except the dairy farmer.

“These cooperatives have turned into empire building and these farmers you see in the room are helping to fund a monster corporation. That’s the problem.

“Presently, most U.S. dairy farmers are losing money on every cow they milk,” he said.

Eby is not Amish and neither are most members of his activist organization.

In 2016 he initiated a federal civil lawsuit on behalf of 115 farmers, including many from Lancaster County, against the Dairy Farmers of America.

The farmers allege that the cooperative, as well as its marketing arm DMA and Texas-based Dean Foods, the nation’s largest milk processor, conspired to monopolize the market on raw milk and drive down prices in the Northeast, leaving independent farmers and cooperatives without a market for their milk.

In response to the lawsuit, Dairy Farmers of America said in a statement, “We believe these allegations are without merit and the activities of DFA, DMA and other affiliated milk marketing cooperatives in the Northeast benefited cooperative members and independent producers alike.”

In 2011, Dairy Farmers of America agreed to pay $50 million to settle a class-action lawsuit. But the 115 farmers refused to settle and launched their own lawsuit.